Divided by a common problem: the economy

26th April 2012

Opposite Strategies in Europe and America

Two radically different solutions to a common problem are being proposed in Europe and America – or so it seems. All our economies are in trouble: massive indebtedness and credit shortages, on the one hand, while housing, employment, and growth are stalled. In America the answer is, by and large, stimulus. In Europe it's austerity. How to make sense of this?

To be sure, this is an oversimplification, but the difference in emphasis is striking. While in the U.S. some far out Republicans oppose government programs in the name of "free markets," and make political capital about deficits, there is a rough consensus in the U.S. that the economy needs stimulation. On the other hand, as The New York Times noted disapprovingly: "Europe's leaders, masters of denial, are still insisting on destructive austerity." (See, "The Global Economy at Risk.")

But maybe the problems just seem the same. They look like economic problems on the surface, but maybe they are really radically different political problems…(read more)